The United States Supreme Court Expands Coverage of the False Claims Act
(Universal Health Services Inc. v. U.S. et al. ex rel. Escobar et. al., case # 15-7 (“Escobar”)
July 19, 2016
In a recent opinion, the United States Supreme Court decided that a defendant can be liable under the False Claims Act for billing the government for goods or services when the defendant is not in compliance with material statutory, regulatory, or contractual requirements related to those good or services. The case is Universal Health Services Inc. v. U.S. et al. ex rel. Escobar et. al., case # 15-7, decided June 16, 2016 and is available at http://www.supremecourt.gov/opinions/15pdf/15-7_a074.pdf.
The Court explained that the legal requirements with which the defendant is not in compliance need not be called “conditions of payment” to make the defendant’s invoices to the government false because in submitting the invoices the defendant is impliedly certifying to the government that it is eligible to participate in the government program or is otherwise eligible to receive the government funds it is seeking. “What matters is not the label that the Government attaches to a requirement, but whether the defendant knowingly violated a requirement that the defendant knows is material to the Government’s payment decision.” Escobar, at pp. 12-14.
Prior to the Court’s decision in Escobar, some lower courts had required that the applicable laws or contractual provisions be expressly referred to as “conditions of payment” by the government to make a defendant’s invoices false claims. After Escobar, billing the government by a defendant who knows that it has failed to comply with material statutory, regulatory or contractual requirements is considered a fraudulent misrepresentation and is actionable under the False Claims Act. Not any failure to comply with any law or contractual obligation supports liability under the False Claims Act – the failure to comply must be “material” to the government. “Material” means that it has a natural tendency to impact the government’s decision to pay the bill.
If you are aware of a person or business that is billing the government for goods or services and the person or business is not in compliance with its contract with the Government or is not in compliance with applicable regulations or program manuals, please call us at 404-842-1075 or click on the link below to email us to discuss whether you have a case under the False Claims Act.
This article was drafted by Wilbanks & Gouinlock, LLP and is intended for general informational and educational purposes only and should not be construed as legal advice.